MOSCOW, July 1The maximum value of the rate on microloans in the Russian Federation since July 1 of this year has decreased to 0.8% per day, or 292% per annum, from the previous 1% per day, or 365% per annum. In addition, the maximum amount of debt on loans for up to a year, taking into account fines, penalties and other charges, will now be no more than 130% of the loan or loan amount against the previous 150%.
New restrictions were introduced on the basis of the relevant law signed by Russian President Vladimir Putin at the end of 2022.
The Bank of Russia, in its review of the performance of microfinance institutions for the first quarter of this year, which was released on June 28, noted that the limitation of the total cost of credit (TFR) at the level of 292% per annum will significantly affect about a third of market participants. In addition, it will help reshape the business models of MFIs. In particular, according to the Central Bank, TIC indicators for large and medium-term loans, as well as payday loans, were in the range of 327-349% per annum.
Commenting on these changes, Andrey Petkov, General Director of IFC «Honest Word», said that the reduction of the maximum rate, firstly, will cause turbulence in the market. Those players who fail to adapt to the new restrictions will stop working. «For some time, this may even lead to a surge in «black» lending. However, the Central Bank carefully monitors fraudsters, so the consequences here are unlikely to be serious,» Petkov said.
Second, legitimate MFIs will lose income and will have a hard time compensating for this by increasing their portfolios due to new macroprudential limits that limit lending to highly leveraged individuals. «Therefore, many companies will go by expanding the product line, will introduce new services and improve the service in order to more effectively attract and retain borrowers,» Petkov said.
Speaking about his company, he noted that the average rate on payday loans for new clients in 2022 was 0.87% per day, for repeat clients — 0.97%. And in 2023, the “newbies” had an average rate of 0.45%, and the “oldies” had 0.87%. At the same time, the average rate on long-term loans with a payment schedule in 2022 was 0.9% for new clients, 0.8% for old ones, and in 2023 it is still at the level of 0.9% for both.< br />